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Net neutrality decision is alarming for all Internet Users

I’m reposting an update that I shared with our public policy mailing list in the wake of the D.C. Circuit’s net neutrality decision. More to come on this issue in the future – stay tuned!

Chris

On Tuesday, January 14th, the U.S. Court of Appeals for the District of Columbia Circuit struck down the core of the Federal Communications Commission’s 2010 Open Internet order. The FCC’s order, while not nearly as complete as Mozilla and other net neutrality advocates had sought, included fundamental protections against blocking and discrimination in modern broadband services that are now no longer effective. The result is significant risk of severe harm to innovation and user choice on the Internet. Over the coming months, expect to see many efforts to push the FCC to respond. Mozilla’s public policy team intends to play a major role in these efforts.

The history of this decision goes back many years. The core of the D.C. Circuit’s decision rests on three FCC orders from the early-mid 2000’s that categorized cable modem, DSL, and wireless data services as “information services” (the same broad regulatory category, for FCC purposes, as, say, email and search engines), and distinctly not “telecommunications services” (such as traditional phone services). The court upheld the FCC’s authority to adopt open Internet rules despite this classification decision, but said that authority ends if the FCC imposes “common carrier” rules on the information services, as is the case with the 2010 Open Internet order.

On the good side, the D.C. Circuit blatantly upheld the FCC’s policy justification for its rules. In no uncertain terms, the court said that net neutrality is important for broadband development and the Internet ecosystem, and that the FCC has general authority to oversee Internet access services. On the (much bigger) bad side, the court held essentially that any rule proscribing neutral treatment for network traffic – including any rule that prohibits blocking – was barred as a common carrier protection. More subtly, but also concerning, the opinion declares unequivocally that broadband providers have cognizable relationships with all edge providers – regardless of whether they interconnect with them. This assumes that the Internet is, in fact, a two-sided market, with potential repercussions for a range of future pricing and interconnection practices.

As many have noted (see, e.g., GigaOm), the biggest losers are individual Internet users, because consumer choice of Internet websites and services will be greatly affected by future behind-the-scenes deals for prioritization (or even blocking). The second category of losers in the wake of this decision are startups and investors. Innovators and new entrants in the Internet applications and services market will face an uphill battle if incumbents have established deals for preferential treatment. But big tech will almost certainly find itself far worse off as the political power balance shifts, as broadband providers will be able to give their vertically-integrated competing offerings every advantage.

In the worst-case scenario, “Internet” to consumers means access to only a few chosen partner sites, in the vein of this well-known graphic. In a more likely outcome, ISPs sell or give prioritized routing to some service providers, placing a huge thumb on the competitive scale in favor of a select few – a major factor when some studies have shown that 1 second of delay can lower traffic by 11%. Perversely, the value of priority deals increases along with congestion, creating disincentives for future investment in broadband capacity, making it seem likely the United States will fall even further than 16th in global rankings of broadband services. To some extent, this is a competition policy problem, but its severity rises to the level of an innovation and user choice problem, for which there is no adequate competition law remedy.

The options for next steps to advance net neutrality are many, but none are easy. En banc D.C. Circuit review is possible, but unlikely; the same is true of Congressional action to adopt net neutrality law or grant FCC clear authority. The FCC may appeal the decision to the Supreme Court, which would take quite some time and presents uncertain prospects. The two most likely outcomes are that the FCC may reclassify broadband services as telecommunications services, undoing the orders of the early 2000s and allowing for the adoption and enforcement of common carrier protections, or the FCC may do nothing for now, and take future case-by-case actions to curtail specific bad practices and slowly build precedents, a tactic that has failed in the past but may work in theory going forward, if in each individual case the FCC can argue that the practice is harmful to broadband service deployment generally.

Net neutrality has often been a hugely divisive political issue, but the principles of openness, innovation, and user choice on the Internet are very widely endorsed. Both the FCC Chairman and President Obama released quick statements of support for the open Internet after the court’s decision. And the legal context is fairly straightforward, for a change – the D.C. Circuit was reasonably clear what arguments would need to be made successfully to uphold case-by-case actions, and signaled strongly that a reclassification order would be upheld in court review.

Mozilla is uniquely positioned to be a leader in the push to restore net neutrality and protect the open Internet, through advocacy and coalition building. Mozilla can work alongside civil society groups engaged in grassroots organizing, while simultaneously recruiting technology companies, investors, and others from the private sector to join the fight. Without a unified front of public and corporate support, net neutrality may indeed be dead. But the FCC’s new Chairman Wheeler has indicated a willingness to preserve the open Internet, and if we on the outside can provide ample political pressure (and cover), victory is ultimately within reach.